Unit 2: Rising costs of production in the uK economy

Sky have this video/article on rising costs

http://news.sky.com/skynews/Home/UK-News/Fuel-Price-Rises-Will-Lead-To-Job-Cuts-Small-Businesses-Say/Article/201101415905024?f=rss

a) Using an AD/AS diagram, explain the effect of these rising costs on the UK economy